Wills Trusts and Succession Planning

7/28/2019 Wills Trusts and Succession Planning

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LawQuest 2009. All Rights are Reserved.

Wills, Trusts and Succession Planning

By Poorvi Chothani, Esq.

LawQuest, Mumbai

www.lawquestinternational.com
http://www.lawquestinternational.com/http://www.lawquestinternational.com/


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LawQuests Areas of Practice Media, Technology and Entertainment Law

Intellectual Property Law

Immigration Law (Global, US immigration and Indian

immigration)

Corporate and Commercial Law

Dispute Resolution

Real Estate Law

Personal, Testamentary and Family Law

Employment Law


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Topics

Wills

Trusts

Succession Planning

Business Succession Planning


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General Rules of Succession Under

The Hindu Succession Act, 1956

Daughter by birth becomes coparcener and has the same right as that of theson in the intestates property;

Daughter is subject to the same liabilities as that of the son in respect of the

intestates property Heirs related to intestate by full blood are preferred over half- blood

relatives;

Two or more heirs who succeed to the intestate property, shall take it is asper capita and not per stripes and as tenants- in common and not as jointtenants.

A child, who was in the womb at the time of intestates death andsubsequently born alive, shall have same right to inherit as if born before thedeath of the intestate.


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Intestacy

When a person dies without making a Will, his property devolves upon hisheirs as per the laws of inheritance/succession applicable to him/her.

When this occurs, the Intestates assets are frozen until a court appoints anadministrator and they are then distributed according to a rigid legalformula.

Until the administrator is appointed, it is possible that no income will beavailable for the intestates dependants and a legal battle may follow if the

distribution is contested in court.

Hence the possibility of any dispute surfacing between dependents could begreatly reduced just by drafting the Will.


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Intestate Hindu Male

Equal Share of the property devolves upon following persons:

Mother being alive

Widow;

Living Son;

Living daughter;

Son of a pre-deceased son;

Child of a pre-deceased son;

Child of a pre-deceased daughter;

Widow of a pre-deceased son;

Son of a pre-deceased son of a predeceased son;

Daughter of a pre-deceased son of a pre-deceased son;

Widow of a pre-deceased son of a pre-deceased son.


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Intestate Inheritance Under the Indian

Succession

a widow and lineal descendants (children and children's

children, born out of lawful marriages), if any, 1/3 of his property

shall belong to the widow, and the remaining 2/3 shall go to the

lineal descendants.

no lineal descendants, but has left persons who are of kindred

(blood relatives) to him, of his property shall belong to the

widow and the other shall go to those who are of kindred to

him.

None kindred to him, the whole of the property shall belong to

the widow.


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Intestate Christian Widow / widower1/3 of the property

Lineal descendantsequally to share 2/3.

In the absence of lineal descendant, to all grand children, -

equally

In the absence of grandchildren, to great grant children

equally

Lineal descendant of a predeceased child or lineal descendant

of a predeceased child of a predeceased child if present -division is based on equal shares, taking the predeceased child

to be alive, and a downward distribution amongst the lineal

descendants.


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Intestate Christian (cont)

With no lineal descendant:

Widow /widower 1/3

Father the Remaining Estate

If Father is dead, to mother, sisters and brothers-

equally


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Intestate Hindu Female

Equal Share of the property to be divided between each of the

following persons

Son

Daughter Husband

Son and daughter of predeceased son (equally together one

share)

Son and daughter of predeceased daughter (equally together oneshare)


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Intestate Parsi

Widow / Widower and Children get equal share

In the absence of widow/widower or children each parent

shall get a share equal to half of a Childs Share

Widow and children of a predeceased son, shall take the

share of the predeceased son

Share of predeceased daughter will be equally distributed to

her children.


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Wills - Terminology

Will - The legal declaration of a man's intentions of what hewills to be performed after his death.

Codicil - A supplement or addition to a will that explains,modifies, or revokes a previous will provision or that adds anadditional provision. A codicil must be signed and witnessedwith the same formalities as those used in the wills

preparation.


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Terminology (contd..)

Testator - the one who makes a will or a testament.

Executor - The person or entity named in a will who has theresponsibility of carrying out the terms of the will (that is,

collecting the will maker's assets, paying the debts, and

distributing the remaining assets to the beneficiaries)
http://www.lectlaw.com/def/e060.htmhttp://www.lectlaw.com/def/e060.htm


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Terminology (contd..)

Legatee - Also known as a beneficiary. A legatee is a person

to whom a legacy is given by a last will and testament.

Administrator - A person appointed by a court to manage

and to distribute the estate of a person who has died without a

will; and is distinguished from an executor of a will.


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Capacity to Make a Will

Anyone of legal age (18 years old) and sound mind can make

a Will. When you have property which you wish to distribute

after of your death, you need to have will.

Under the Indian laws minors (below 18 years) and lunatics

(people of unsound mind) are considered incompetent to make

a will


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Functions of a Will

Implement the wishes of the testator

Distribution of the assets as per the testators desire

Method disposing property

Appointing executors, crating trusts and Appointing testamentary guardians of minor children

Avoid inheritance disputes after the death of the testator

A Will is a secret and confidential document that needs to be

safe and accessible to the executor or next of kin.


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Essentials of a Will

Will should be

o In writing;

o Signed by the testator; and

o Attested by two witnesses


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The Most Important Issue

To Ascertain Whether It Is In Fact TheLast Will Of The Testator


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After the Death of the Testator

Obtain Probate if there is a Will

Executor

Beneficiary

Apply for Letters of Administration if there is no Will

Heirs

Court Appoints an Administrator

Processing time

About 6 months if the Will is not Challenged

Indefinite if the Will is Challenged


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10 Tips to be Considered While Drafting a

Good Will

Choose who draws up your will wisely

Choose your executors well

Appoint a default or substitute executor

Appoint guardians Appoint trustworthy trustees /executors

Make specific legacies

Make sure you leave a residual legacy

Save tax with a trust (no estate tax in India)

Sign your Will

Get it stored safely


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Should You Have A Trust?

Depends on the size of the estate and the purpose of the trust

A trust will help avoid a court hearing in the event the

testator becomes incompetent or are rendered unable to

provide for yourself

A trust also helps to provide for minor children,

grandchildren, or relatives with a disability that makes it

difficult for them to manage money


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Business Succession

Succession Planning for Businesses

o To stay successful, Businesses need to define their objectives

o Separate family interests from business interests

o Incremental separation of management from ownership

o Creation of an environment of transparency and meritocracy

o Grooming talent

o Interaction between three groups of stakeholders: family managers,professional managers and family shareholders

o Guide and supervise the executive management in the best interest ofits shareholders


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Certain Points to Remember Before Planning

Personal Succession

Obtain written consent of executor, trustee or guardian

Be specific and provide comprehensive, identifying details

It is a good idea to video record the process of executing yourwill

Copies of the recording should be given to decision makers

Registering your Will is Optional

Choice of witnesses

Presence of Both witnesses not required but recommended


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General Tips

Making nominations (property, bank accounts, insurance policies andshares)

Important - A nominee is only a trustee for legal heirs and the right of

the legal heirs cannot be taken away by nomination

Seek professional advice

Revise documentation whenever circumstances change

Find willing and capable trustees


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Family Office

Asset Reporting

Record Management

Taxation Legal

Private Equity

Overseas Investments

Alternative Assets


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522 Maker Chambers V, 221 Nariman PointMumbai 400 021

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